Publication: Financial Mail
Reporter: Peter Honey
Shauket Fakie - A Trail that has Veered between Darkness and Light
deal controversy clouds AG's fine achievements
Next week, February
15, auditor-general (AG) Shauket Fakie pursues what could be the last
opportunity to repair his damaged credibility *1 over
the investigation into SA's controversial multibillion-rand arms deal.
It will take the form of an application to the court of appeal in
Bloemfontein against Fakie's conviction for contempt of court. This was for
allegedly withholding documents that a high court judge had ordered him to hand
over to businessman Richard Young's military technology company, C²I², under the
Promotion of Access to Information Act.
Young, who maintains he lost a
bid for a lucrative arms deal subcontract because of corruption, has long
claimed that Fakie, who led the arms deal probe, excised
incriminating details *2 from the final report under
executive pressure *3 - which is why Young sought, and won, access to the
original report drafts and working documents. Some of those documents have
pointed to executive vetting of the report prior to its release; the full extent
or effect of that vetting, though, has yet to emerge
In an interview this week, Fakie (52) repeated earlier
denials that he had taken part in a cover-up, saying the details left out of the
final report did not materially change its substance
"I know from the bottom of my heart that I have done
absolutely nothing wrong," he said. "I did the best I could
with the arms deal and put all the facts on the table based on the information
at my disposal at the time *6."
He also insisted he had not
deliberately defied the court order. He maintains the court
was not entirely clear about the documents required *7. Besides, he adds,
he was "ethically and professionally" *8 bound to
protect the anonymity of people who had provided him with information on the
basis of confidentiality.
"We felt it would be improper to just hand
over those documents. We would let the courts decide. If a court ordered me to
hand them over I would do so ; then I would not be contravening my professional
ethics and quality."
Young is unimpressed. Despite having won possession
of some 20 000 pages of drafts, working documents and notes from Fakie's office,
he insists that important information remains hidden
*9. "We're still doing a detailed analysis ," he says. "But already one
can see that it's the sensitive things that have been
However Fakie's appeal turns out - whether he is
acquitted or must serve a 30-day sentence for contempt - it is bound to stir up
the issue that has plagued him for most of his tenure
as SA's chief bookkeeper. Otherwise it has been a tenure distinguished by
achievement, respect and prestige - which will expire on December 1, the date in
1999 when he took up his seven-year, nonrenewable presidential appointment *10.
"Overall he has been
a good AG," says Judith February, senior analyst for independent democracy
monitor Idasa. "His coming in with the implementation of the Public Finance
Management Act [PFMA, which tightened state financial controls] and his
persistent reporting of underspending in government did a lot to focus attention
She points out, though, that an AG can be truly
effective only within the broader context of government. "Other role-players -
for instance, parliament's public accounts committee (Scopa) and departmental
managers - need to take up what the AG is saying," she says. "Often, as in the case of Scopa *11, they haven't done that."
Fakie himself considers highlights of his term to include the
transformation of the AG's office from a typical state bureaucracy to a more
professional and service-orientated auditing agency, and the office's
involvement in international auditing - it audits the UN and has balanced the books of the World Health Organisation and the UN
Industrial Development Organisation *12.
The AG's office employs
about 1 500 people, of which about 120 are qualified chartered accountants (CAs)
- a considerable improvement on the situation in 1999, when about 10 of the
total staff complement of 1 250 were CAs. Fakie says a further 600 trainee
accountants are on the payroll and should complete their qualifications over the
next few years.
"Within three to five years I expect at least half the
staff of the office will be qualified accountants," he says.
Fakie released an annual general audit report on national government that found
unauthorised, irregular and wasteful spending amounting to R84m for 2004/2005. His first general report, for
1999/2000, found R151m of unauthorised spending, which nominally at least
suggests an improvement over the past six years.
But Fakie says it's not
fair to make a direct numerical comparison because stricter financial control
measures, such as the PFMA, have raised reporting standards in recent years.
Also, the rise in spending on social grants and other entitlements for the poor
has increased fiscal management pressures on state departments concerned,
sometimes forcing them to engage in unauthorised payments if budgets become
"In the context of total government
expenditure of R135bn-R140bn, R84m in unauthorised spending is not a significant
amount *13. It used to be significantly worse - up to 5% in some cases.
So in that sense, government's financial management has improved."
Fakie remains critical of state departments' internal controls and the lack of
skills and capacity - "that's why you find many departments come short in
efficient public service delivery".
Fakie says that, apart from the arms deal controversy, his one other regret
is that he will not have time before retirement to raise the level of competence
of his office to the level he hoped for when he started the job. "Some of the
challenges and inherent problems were far more deeply embedded than we thought
at first," he says.
One function that Fakie would like to see his office
improve is "performance auditing", in which the AG evaluates a government
department's ability to deliver "value for money", as opposed to simply
measuring its ability to manage its finances in isolation from service delivery.
The AG devotes only 7% of its resources to performance audits; Fakie would like
to raise that to between 12% and 15% of resources.
"It's something I
shall leave behind for my successor to achieve," he says.
Fakie says he
does not know what he will do when he moves on from his current job. A more
important question is who will replace him.
The retirement of public
protector Selby Baqwa - one of Fakie's two co-investigators
of the arms deal - in 2002 led to a significant weakening of the public
protector's oversight role. Similarly, the resignation of national director of prosecutions Bulelani Ngcuka - the third
joint investigator - has left the Scorpions special investigations unit
under a political cloud.
As government intensifies its fight against maladministration and
corruption , the function of key oversight agencies, such as the AG, will become
ever more important. *14
Shauket Fakie - Proud of Improvements
With acknowledgements to Peter Honey and Financial
Business Day, 2003-05-22
*2 This can be determined
objectively by comparison of the draft joint report and the final joint
*3 This can be determined objectively by
comparison of the notes taken in the meeting with MINCOM to review the draft
joint report and the insertions and deletions in the final joint
*4 It has indeed fully emerged, it is
just that no one is interested anymore.
changes from the draft reports to the final joint report are so stark and so
material that there would be far stronger grounds to institute an independent
judicial commission of enquiry than was the case in the Mac and Moo
Furthermore, this stooge claimed in Parliament on at least three
occasions, as well as in television press conferences, that there were no
changes other than as enhancing "user-friendliness" of the final joint report.
These averments were blatant lies and should have resulted in investigation and
6.1 Documents date-stamped six months prior to
the release of the joint report by the Office of the AG show them to be in
possession of breath-takingly incriminating evidence of fraud and conspiracy to
commit fraud involving the corvete combat suite
6.2 On 23 September 2003, some two years
after the release of the final report, the senior counsel for the AG, Advocate
A.M. Meyer SC, finally admitted "that the procurement process....fell short of
the constitutional prescripts of fairness, equitability and
6.3 On 24 August 2001, some three
months before the release of the final report, the joint investigation team
issued an affidavit in support of searches and seizures of Schabir Shaikh's and
Thomson-CSF's premises in Durban, Midrand, Pretoria, Paris and Port Louis,
Mauritius. Nearly all of the averments of criminality involving Shaikh,
Thomson-CSF and the benefactor J.G. Zuma were found to be true beyond a
reasonable doubt in the Durban High Court in 2005, many will be re-visited in
Either there was no joint investigation, or Fakie never did his job
In any case, much of the material relevant to the Shaikh,
Nkobi, Thomson-CSF, ADS, J.G. Zuma matter was provided directly to the AG's own
investigators. None of this sees the light of day in the joint
*7 This was a deliberate, opportunistic
and self-serving interpretation of Judge Willie Hartzenberg's court order
standing alone from the judgment. Standing together with the judgment, the AG's
senior counsel Advocate Gilbert Marcus SC, one of the top practitioners of
administrative law in the country, agreed that the order was indeed clear. Judge
Annemarie de Vos concurred with Judge
*8 In opposition to a court order
*9 Important information
remains undelivered - that's further
*10 Protect the person that appointed
*11 Fakie also treated SCOPA with
*12 When the country is almost
collapsing due to corruption at all three levels of government, its primary
constitutional watchdog is self-actualising in foreign
*13 It's just that the rest hasn't been
exposed. The ANC government would not have made corruption one of their primary
pillars of policy for the upcoming elections if national corruption was limited
to 0,06% of government expenditure.
*14 Indeed -
but that's almost a tautology.
It is time for a trial that will veer
darkness into light.